Public Utility Easements in Public Rights-of-Way

September 25, 1997, Richmond

Members of the House Corporations, Insurance and
Banking committee and the Senate Commerce and Labor
committee met jointly to further consider the issue of public utility
easements in public rights-of-way, a subject addressed by both
committees during the 1997 Session of the General Assembly
(HB 2915 and SB 1013). The passage of these identical bills,
which expire July 1, 1998, limits the rates charged by localities
and the Commonwealth Transportation Board for the use of
public rights-of-way or easements to amounts or rates in effect as
of February 1, 1997.

Representatives from the Virginia Telephone Industry
Association (VTIA), localities, and the Virginia Department
of Transportation (VDOT), which conducted a series of
meetings following the adjournment of the 1997 General Assembly to
try to negotiate an agreement concerning future rates or
charges for the use of such rights-of-way, briefed the special
subcommittee on the outcome of those meetings. To date, no
agreement has been reached among the participants.

Telephone Industry Concerns

The VTIA described the issues remaining to be settled as
(i) how much money will be collected from utilities for the use
of rights-of-way? (ii) how or on what basis will the fees be
collected? (iii) will the fees be passed through directly to the
consumer? and (iv) who pays the associated costs of relocating
existing telecommunication facilities?

The VTIA voiced concerns over the higher rates sought
by localities in light of the amount of taxes already paid by
utilities to the Commonwealth and local governments. As an
example, the VTIA informed the special subcommittee that Bell
Atlantic currently provides over $226 million in tax revenue to the
Commonwealth and its localities.

The VTIA also stated that the proposed increases in fees
are discriminatory because telecommunication companies
already pay taxes for the use of rights-of-way just as others who
also use the right-of-way and users of the road itself pay. The
imposition of additional new fees was described as unfairly
singling out the communications industry. According to the VTIA,
any increases in access charges by localities must be passed
directly through to the consumer, since the incumbent
telecommunications companies are prohibited by law from increasing
their prices. Additionally, incumbent utilities must remain as
providers of last resort and thus are prohibited from refusing
to offer service in high-tax localities. Such an arrangement,
argues the VTIA, prohibits the establishment of fair market
prices since the utility cannot choose not to provide service.

Collecting fees based on a percentage of gross receipts or
a per-access line fee were suggested by VTIA as the easiest
ways administratively to collect the fees. The VTIA also stated
that VDOT is moving ahead with the promulgation of its fee
schedule, and that this could result in multiple, confusing
payment plans depending on who controls the right-of-way.

The last major issue discussed by the VTIA was
relocation of existing facilities, which is very expensive. For the first
seven months of 1997, Bell Atlantic paid $9 million for relocation.
The VTIA stated that it is not fair for localities to charge
excessive fees for the use of rights-of-way and not pay for any
necessary relocation fees.

Representatives from MCI supported the proposals
presented by the VTIA and emphasized the negative economic
development consequences that may result from localities
charging excessive fees for the use of public rights-of-way. MCI
stated that potential new service providers may choose to site
facilities (such as switches) outside of Virginia if there is an
excessive cost associated with locating inside the Commonwealth.
The rates charged for the use of rights-of-way were
described as a factor considered by industry when picking a business
location.

Local Government

Representatives from the Virginia Municipal League
(VML), the Virginia Association of Counties (VACO), and the
Hampton Roads Planning District Commission offered testimony
supporting the continuing authority of localities to set and
collect reasonable fees for the use of publicly owned rights-of-way.
The authority for local governments to collect such fees is
derived from the state Constitution. Additionally, localities have a
fiscal obligation to protect local assets and should not be
giving away a benefit to private enterprise without collecting fair
and reasonable fees.

VACO acknowledged that a significant portion of the
rights-of-way sought by telecommunications providers is assigned
to the secondary road system and is thus managed and
controlled by VDOT. However, VACO feels that localities should
maintain the authority to regulate the placement of
telecommunications providers through the local zoning and
comprehensive planning process, whether or not these facilities are in a
VDOT right-of-way.

Another idea presented by VACO is to deposit any
revenue generated from the use of rights-of-way to the
Transportation Trust Fund, to be reallocated back to the locality of origin
for secondary roads above and beyond any budgeted VDOT
secondary road allocation.

VDOT

A representative from VDOT reported to the special
subcommittee that guidelines were being developed regarding
the use of rights-of-way. VDOT is promulgating these
standards and guidelines in accordance with the Administrative
Process Act. VDOT anticipates publishing these standards in the
Virginia Register sometime in early November.

The chairman concluded the meeting by urging the
affected parties to continue working towards an agreement
regarding the use of rights-of-way and expressed hope that another
meeting could be conducted prior to the 1998 Session of the
General Assembly to finalize an acceptable proposal.